HCHC plans to cut 10 percent from operating expenses

Top-level administration at the Henry County Health Center (HCHC) is reaching for the scissors for use on the facility’s operating budget.

It isn’t a case that HCHC is mired in red ink. In fact, the opposite is true. Terming the expense cutting “preventive medicine” would be a good description.

Robb Gardner, HCHC CEO, said last (fiscal) year’s operating expenses were $34 million. “We want to cut that by 10 percent,” he said.

The cut, Gardner continued, would be over the next 8-12 months and carefully scrutinized.

“People already know about it, so it won’t be any surprise,” Gardner began. “We have to be very strategic on where we can reduce our costs while at the same time being committed to outstanding value-based care. How do we re-adjust? We will.”

A significant factor in HCHC’s need to reduce expenses, hospital officials say, is the decrease in Medicaid reimbursement. Dave Muhs, HCHC’s chief financial officer, said that although the hospital “had a big increase in patient volume” in the past year, that increase didn’t show up on the balance sheet.

Medicaid reimbursement, or the lack thereof, had the biggest impact on HCHC’s financial picture the past year, Muhs said, noting that the reimbursement dropped by over $1M. Hospital officials feel the picture will become more cloudy in future years and that’s the primary reason cuts will be studied.

Another factor influencing finances was an adjustment in IPERS which amounted to about a $30,000 increase in HCHC’s contribution to employees’ IPERS accounts. “Rates are going up (again) July 1,” Muhs said. “I don’t know to what extent. The increase is supposed to be capped at 1 percent.”

Despite the Medicaid doom and gloom, Muhs said last year’s gross revenue “was right on target. We are faring much better than some of our counterparts.”

Gardner agreed, noting that some hospitals are clinging to life. “Our balance sheet was very robust. The average operating margin (revenue) for Iowa hospitals increased by one tenth of 1 percent last year.”

In other business, trustees hosted a public hearing on the Park Place roof replacement project and later awarded the bid to Brockway Mechanical and Roofing of Burlington. Three bids were received but one was rejected because a bid was not made on an alternate HCHC desired. Brockway’s total bid was $140,878.

“I feel we have a good bid from them,” Gardner said, noting HCHC had budgeted $150,000 for the project which did not include one of the alternates in the accepted bid.

The new roof will replace the original roof which is 23 years old. Work is to be finished no later than October.

HCHC officials are moving into the “decision phase” on remodeling plans for the medical clinic. “We have a meeting Thursday on it, and we are looking at how we can keep costs down,” Gardner said.

Patti Sallee, director of public health, gave a short report to the board. Sallee said the name of the organization has been changed from community health to public health because “community health was confusing.”

The agency is in the process of applying for nearly $500,000 in grants for the current fiscal year. She also said staff has made 1,750 visits in home health care in the past six months.

Trustees will meet again Tuesday, Aug. 15, at noon in the health center’s board room.